Self Directed 401K

Using Self Directed 401K and IRA Accounts For Retirement Planning

Many corporations offer their employees a retirement plan of some kind.  It is usually in the form of a 401K that the company contributes a certain amount to according to how much you contribute or they contribute a set amount and you can choose to contribute or not.  Even if you do not have a retirement plan through your employer you can set up your own self directed 401k and have complete control over what you invest in, how much and how often. Most 401k plans are self-directed so you can do your own research and make your own investment decisions based on the information you uncover.  You can also choose an individual retirement account or self-directed IRA for your investments and retirement plan.  No matter which way you go with these kind of retirement planning options, you have control over the investing options.

Naturally, you must open a 401k or IRA account to get started.  Once you have established an account either online (easiest) or in person at your bank, you can select the investments where you prefer to place your funds.  Much of the decision of what to invest in is determined by your age.  Younger investors with a self directed 401k might take more risks than someone closer to retirement age.  The investments with the least risk involved include money markets or real estate trusts even though the return is lower.  Stable investments are the best way to protect losing a large part of your investment portfolio when markets shift.  If you aren’t sure how to best invest get help from a brokerage firm or allow them to help you get a retirement account setup according to your needs. 

Self-directed IRA and 401k accounts also offer tax breaks since the money you contribute is taken from your taxable income resulting in reducing your taxes.  You will benefit from the most tax breaks by avoiding prohibited transactions like using your IRA as collateral for a loan, borrowing money from the account or using the funds for any personal reason.  Since the tax laws change from time to time it is wise to research any changes involving retirement accounts. 

You can also choose to use your self directed 401k to invest in less traditional investment choices like secured and unsecured notes, tax lien certificates, deeds of trust, mortgages, limited partnerships, structured settlements and other non-traditional investments.  Investment choices are completely up to you when you utilize self-directed IRA and 401K accounts.